Economics HL Paper 2

[Malino]

1 hour ago, thestruggleisreal28 said:

 

For the slump in commodity prices I did a demand and supply diagram at first too, but then I crossed it out because I thought that maybe the slump referred to commodity prices in the world and thus Indonesia's export revenues decreased as they couldn't compete at the world price. I guess I was wrong?

I think that if you explain it well you can do any duagram because the question didn't specify which diagram to use so that usually means there is more than one acceptable diagram!

[thestruggleisreal28]

11 hours ago, Malino said:

I think that if you explain it well you can do any duagram because the question didn't specify which diagram to use so that usually means there is more than one acceptable diagram!

That gives me some hope haha! Thank you so much 

[#teamnosleep]

Guys, for the slump in commodity prices, I wrote about how Indonesia's currency depreciation and with Indonesia being a developing country that relies on agricultural commodities for large part of their export revenues that contributes to making Indonesia's current account deficit worse. For the diagram, I used the exchange rate diagram to show Indonesia's depreciating currency. I don't even know if it makes sense now :/. Any of you guys with other answers?

[Sandy]

The paper was so easy I'm starting to doubt myself now....maybe I made a stupid mistake or something

33 minutes ago, #teamnosleep said:

Guys, for the slump in commodity prices, I wrote about how Indonesia's currency depreciation and with Indonesia being a developing country that relies on agricultural commodities for large part of their export revenues that contributes to making Indonesia's current account deficit worse. For the diagram, I used the exchange rate diagram to show Indonesia's depreciating currency. I don't even know if it makes sense now :/. Any of you guys with other answers?

Idr exactly what I wrote but it was something similar...The slump was due to the change in exchange rate

[sajtkukac12]

For part (d) of question 2, did you guys also outline the costs of the potential policies to reduce a current account deficit? Those of ependiture-switching and reducing policies, or just talk about how a persistent current account deficit can be harmful for Indonesia?

[#teamnosleep]

17 hours ago, sajtkukac12 said:

For part (d) of question 2, did you guys also outline the costs of the potential policies to reduce a current account deficit? Those of ependiture-switching and reducing policies, or just talk about how a persistent current account deficit can be harmful for Indonesia?

I talked about the possible solutions to correct Indonesia's current account deficit (expenditure switching + reducing) and I also talked about the effects of a persistent current account deficit on Indonesia (poor international credit ratings, depreciation of currency, increase indebtedness). I also talked about how the removal of fuel subsidies will shift gov't spending to education, healthcare, etc. 

[sajtkukac12]

2 hours ago, #teamnosleep said:

I talked about the possible solutions to correct Indonesia's current account deficit (expenditure switching + reducing) and I also talked about the effects of a persistent current account deficit on Indonesia (poor international credit ratings, depreciation of currency, increase indebtedness). I also talked about how the removal of fuel subsidies will shift gov't spending to education, healthcare, etc. 

Wow. This seems a pretty solid answer. I was mainly trying to point out the threats of too much exposure of Indonesia to foreign investors, whose capital inflows finance the deficit of the current account in terms of a surplus on the financial account, and explained how a capital flight due to the evaporation of foreign investors' confidence could lead to a depreciation of the currency and cause inflation. I didn't have time to elaborate the policies that might be used to reduce the current account deficit, although the costs of those policies (e.g. lower economic growth in case of expenditure-reducing policies) may have improved a lot on my evaluation. 

[#teamnosleep]

15 minutes ago, sajtkukac12 said:

Wow. This seems a pretty solid answer. I was mainly trying to point out the threats of too much exposure of Indonesia to foreign investors, whose capital inflows finance the deficit of the current account in terms of a surplus on the financial account, and explained how a capital flight due to the evaporation of foreign investors' confidence could lead to a depreciation of the currency and cause inflation. I didn't have time to elaborate the policies that might be used to reduce the current account deficit, although the costs of those policies (e.g. lower economic growth in case of expenditure-reducing policies) may have improved a lot on my evaluation. 

While you ran out of time to elaborate on the policies, you did mention a good lot of what the effect of a persistent current account deficit on Indonesia, so despite not getting full points, you must have at least got a partial bit of it :).

[IBsurvivor98]

On 5/6/2016 at 10:24 PM, Rohan Kalwani said:

For the second question (Indonesia) in paper 2, what diagram did you draw for the part about falling commodity prices in Indonesia and its effect on export revenues?

Yes, a lot of students are having problems with that question. For immediate help, please contact ANFA and Harvatska.They'll gladly respond quickly!